Rick Wagner

More biofuels should be coming to East Tennessee and Southwest Virginia soon, thanks to the pairing of a local petroleum company and a North Carolina-based biofuels operation.

Appalachian Oil Co., owner of the region's ubiquitous Appco convenience centers, is to become part of the Charlotte, N.C.-based biofuels company called NewGen Technologies Inc.

The business has a wholly owned subsidiary called ReFuel America.

The combined companies eventually will distribute biodiesel and ethanol-based fuels across the Southeast, including the greater Tri-Cities, according to Appalachian President and Chief Executive Officer Jeff Benedict.

"What these guys are looking for is expertise in the petroleum business," Benedict said.

But Benedict also said that Appalachian will continue to operate for now as it is in Northeast Tennessee, Southwest Virginia and elsewhere in the region, giving both companies the best of both worlds.

"The acquisition of Appco allows ReFuel (America) to capitalize on the existing Appco supply chain distribution to over 200 outlets for our premium blended biofuels," Michael F. D'Onofrio, CEO of NewGen, said in a news release.

Benedict said bringing the petroleum into a biofuels company is "essential to a successful biofuels company" since ethanol-based and biodiesel fuels both contain traditional petroleum.

"Many of the biofuels producers are trying to do this outside of the petroleum industry, almost in opposition to the petroleum industry," Benedict said.

"This is what's going on in the industry. It's the direction a lot of people think it's moving," Benedict said of plans to market biofuels in the Tri-Cities, Charlotte, Knoxville, Spartanburg, S.C., and Albany, Ga., areas. "We will be working with these guys to distribute all kinds of biofuels combinations."

For instance, most of Appco's convenience stores sell E10 fuel, which is 10 percent ethanol and 90 percent gasoline.

But an increasing number of vehicles can use anything from pure gasoline to E85, which is 85 percent ethanol and 15 percent gasoline, or anything in between.

As for petroleum diesel, it can be mixed with varying amounts of plant- or animal-based oils to make B5, which is 5 percent biodiesel, to B20, which is 20 percent. NewGen also has a biodiesel that is 10 percent ethanol.

"I think they (NewGen officials) do want to see these fuels used," said Jonathan Overly, executive director of the Knoxville-based East Tennessee Clean Fuels Coalition. "On the surface, it (the acquisition) looks fantastic."

NewGen Technologies Thursday announced it had reached an agreement with BioFuel Investments LLC (BFI) for $70 million in secured debt financing. The money, according to a news release, will complete the purchase of Appalachian Oil, pay off existing debt and fund other strategic objectives to facilitate distribution of premium blended biofuels through its "ReFuel America" brand.

BFI's financing is to be for a 10-year term with an interest rate of 10 percent, interest-only for the first two years. In addition, BFI will be able to purchase 5 million shares of NewGen's common stock at a price of $2 per share.

"Upon successful closing of this transaction, we expect to roll out additional strategic initiatives. Our next targets will focus on upstream supply to complement our global ‘Fields to Wheels' business plan," said S. Bruce Wunner, CEO of NewGen.

Headquartered in Blountville, Appalachian Oil was founded in 1923. It operates from its offices in Tennessee and Virginia, selling to wholesale and retail customers in Tennessee, Kentucky, Virginia, West Virginia, North Carolina and South Carolina.

Appco's branded products include Exxon, Marathon, Sunoco, Citgo and its own "Appco" brand.

Appco operates 58 company-owned gas station convenience stores and supplies petroleum products to more than 160 other independent dealers.

In the 12-month period ended Sept. 30, 2006, Appco had revenue of more than $400 million, distribution of more than 225 million gallons of fuel products with more than 500 employees.

For more information go to www.goappco.com, www.newgenholdings.com and www.refuelamerica.com.